an economic case for freeway optimization...economic case for freeway management april 11, 2014...

Economic Case for Freeway Management April 11, 2014

An Economic Case for Freeway Optimizationor, “The Artist Formerly Known as Congestion Pricing”

Mike Brown, PE, AICPPresident, Metro Analytics

Chandler Duncan, AICPEDR Group

Win-Win for

Virtually Everyone


Context

• Ask any DOT, “Are you optimizing your freeway?”

Of course, as best as we can.

Truth is, America has no truly “optimized freeways”

• Optimizing freeways may be the single most importantthing we could do to help freeways fit into a sustainablefuture and contribute to increased usage of other modes

• This may well be the highest Benefit / Cost ratioopportunity – swamping all other project types.


Congestion Stinks!• But what else can we do besides build?

Billions in savings, productivity, new jobsavailable for any city that can reducefreeway congestion.


Congestion Stinks!

• Build our way out?

Been there, Done that, Doesn’t work

It’s a cancer that returns with a vengeance

• Decide our way out? – Easy

Technically Easy

Politically Impossible!!

Eventually Inevitable?


Technically Easy?

• Freeway congestion is easy to eliminate.

Approaching failure? Slow the Flow!

• How?

Congestion Pricing

Extended Ramp Metering

Decent Alternatives to Create Elasticity


Politically Impossible!

Because people think…

• Pricing will clobber side-streets as people avoid fees!

• Congestion Pricing is a tax, or even double-tax!

TEA Party = “Taxed Enough Already”

• Right or wrong, free freeways are an Institution

Like baseball and apple pie!

Could become politically inevitable if we educate about the positives


Key to Inevitability –Convince People They Are Better Off

• Free freeways ensure doom on all streets

• Pricing makes all streets better off

Really? Yes, Really


Scenario 1:Everyday, USA

*Based in Salt Lake City, Utah, but generally applicable almost anywhere


I-215 Redwood I-15 State 700 E

Green: Maximum 1-hr Capacities



Blue: 90% Loads, just before peak hour



Red: Freeway Sustains Max for 15 Minutes



Black: Collapses toStop-n-Go; 70%throughput fornext 2-hours

Yellow: Remaining30% try to go

somewhere else



Their diversioncauses otherroads to fail



Now 2nd Freewaycollapses. All

streets becomeparking lots

Lose-Losefor everyone


Scenario 2:Tollway, USA…



Tolling vs Pricing

• Tolling is a tax: aimed at maximum revenue

High Prices – All day, for Construction Payoff + Profit

• Pricing is management: aimed at max throughput & speed

Low Prices – Free most of the time, and at 5pm justenough to avoid collapse.

• Tolled roads have great speeds

But what about side streets?



High prices could shifttoo much to arterials.

Win-Lose:Win for Many,

Lose for Too Many

Tolling is better than status quo, and a good wayto generate funds if that is the objective.


Scenario 3, Freeway Optimization:Everyday, USA…

Someday




90% Loads, just before peak hour



Pink: Computer-managed access allows freeways to“hover” at 95%, just short of “red” collapse



Some people move toarterials to avoid fees.

Others use transit, adjust schedules,or eventually move closer to work.



But even with many shiftingto side streets, side streetsare NOT worse off.

Why?



Yes, 5% leave.But 20% come back, because they fit!Last 5% is intentional safety cushion.


And where every road crawls today…

Every road moves tomorrow, sovirtually everyone is better off!

Win – Win!



Max PotentialThroughput

Peak PeriodSad Reality

ManagedBliss

100%

77%

95%

Screenline

PeakVolumes



100%

28%

86%

Screenline

WeightedSpeeds

Peak PeriodSad Reality

ManagedBliss

Max PotentialThroughput


Speed vs.Flow

Pricing moves everyone out of the “Road Rage” zone, intoa happier place, just at the verge of “white-knuckle”

Happy Zone

WhiteKnuckle

Road RageZone


I need morepower.

Three of Eightcylinders aren’t

working.

Government Engineers


So my V-8 actslike a V-5… If weinstall a V-12 willit act like a V-8?

We’ll have todouble-deck two

V-6’s, but…Let’s do it!

Government Engineers


Highlights• Pricing is like a tune-up that creates lots of “new” capacity.

Equivalent to many new freeway lanes

Guarantees 60+ speeds, 24-7

Costs very little to implement

Makes parallel arterial speeds slightly faster too.

Extremely high Benefit-Cost ratio

Generates cash for mitigation projects.


Highlights• If distance based (frequent towers), it does all of this

without much if any new VMT or sprawl.

Improves air quality.

More sustainable.

• All of that’s got to be worth something, right?


Words Matter

Meet Mr.Congestion Pricing

Meet Mr. FreewayOptimization


The Economics ofFreeway Optimization

Chandler DuncanEconomic Development Research Group


Economic Development Research Group• Have Studied Tolls, PPP’s and congestion pricing economic effects

on States and MPO’s

• Active in TRB Congestion Pricing Research

• National Expertise in Transportation cost-benefit analysis, economicimpact analysis and fiscal impact analysis

• No “Universal” Position on Congestion Pricing

• Interested in Developing Best Practices for Implementation


Removes regulatory barriers andcreates programs for market-basedsolutions

Greater state autonomy in establishing toll facilitiesfor new lanes or facilities

Congestion pricing strategies: priced express lanes,HOV to HOT lanes

Value Pricing Pilot Program: for pricing of existingtoll-free facilities without substantial reconstruction


Three E’s to Remember

• 1. ECONOMICS

Consider economic effects of tolls, not justperformance effects

• 2. EFFICIENCY

Look at the whole networks (not just the tolledfacility)

• 3. EQUITY

It matters who pays, and how you spend theproceeds


Economic Break-Even Point

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00

Toll Revenue Collected (InMillions)

Societal Benefit of TrafficImpact

Implementation Cost(Including ImprovementCosts Imposed onSecondary Systems)

Total Societal Benefit (ofToll + Secondary RoadwayImprovemetns)

Source: EDR Group/TREDIS – (with Data from Portland Metro Model)


Base Case: 2040“Do Nothing”

• All Wasatch Front freeways =unmanaged access

• Most segments failing in peak hours


2040 “Blind Tolls”

• What if all freeways were converted to tollways?

Primary Objective: Maximize Revenue

Indirect Benefits: Gets freeways moving again


2040 Freeway Optimization

• All freeways remain free most of the time.

• Modest fee applied only at eminent failure.

Primary Objective: Maximize Throughput

Indirect Benefits: Income stream for mitigation


TREDISTransportation Economic Development Impact System

• Can be integratedwith travel models

• Compare projectideas against base case

• Monetary value, GDP and jobs created by…

Reduced VMT

Reduced Travel Times


Economic Benefits and ImpactsBenefits and Positive Impacts “Blind Tolls” Congestion

Pricing

30-Year Societal Benefit $4 Billion $54 Billion

30-Year Gross Regional Product chg. $1.5 Billion+/- $1.7 Billion

$12 Billion+/- $760 Million

New Jobs, Year 30 2,100+/- 1000

17,000+/- 500

Potential Transportation EffectsPotential Toll Levy Effects


Look Before You Leap! “Blind Tolls” (as taxes) can actually make the economy smaller

Some states require economic impact analysis

Economic Tolling Evaluation Can Help:

• Learn from the experiences of peers (case studies)

• Educate the Public and Stakeholders

• Assess what the local market will bear

• Identify economic break-even toll and revenue points

• Assess Land Use and Community Development Effects


“Pricing” Vs. Taxation –What’s a Network Worth?


Competitive Advantage

Frustrated businesses

One more reason to choose Utah!


We want less use of cars, and more use oftransit. But price structure is opposite.

Cars

Transi

t

The way it is…The way it should be, to get what we want…

Pay

for

Cheap


"Today's problems cannot be solved by thelevel of thinking that created them."

– Albert Einstein

Solving Future MobilityProblems Requires

“Non-Linear”Thinking

Outside the Box

!!!!!!

an economic case for freeway optimization...economic case for freeway management april 11, 2014...

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